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IDBI Capital Report
Shree Cement Ltd.'s Q2 FY24 (standalone) Ebitda came in line with consensus estimate. If compared with peers then Shree Cement reported Ebitda/tonne of Rs 1061 and is higher than its peers like Ultratech Cement Ltd.
Though volume growth and asset utilisation was lower then Ultratech and company guided this to improve in Q3 FY24. Price hikes of Rs 500/tonne is sustaining in east and reduction in power and fuel cost by 10% QoQ in Q3 FY24 to drive profitability.
Shree Cement has preponed its capacity addition plans, with target to reach capacity of 56 million tonnes per annum by FY24E and 62 mtpa by FY25E and 80 mtpa by CY2028E.
We have currently modeled 50 mtpa by FY24E, 53 mtpa by FY25E. And thus there is upside risk to our estimate. Post the result we have reduced fuel cost and thus Ebitda is increased by 6% for FY24E/25E and target price is revised to Rs 26008 (earlier Rs 24406). Retain 'Hold' rating.
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